Reading reserve information without assuming reserves are adequate
Learn how to analyze your condo association's reserve fund disclosures and why existing reserve levels may not fully cover future maintenance needs.
The short answer
Illinois law requires condo budgets to include reserves for capital expenditures and deferred maintenance, unless owners vote to waive this requirement by a two-thirds vote. Reading reserve disclosures requires looking at the current balance, planned projects, and the frequency of past waivers. Never assume the current balance is sufficient for long-term structural repairs without professional investigation.
The Role of Statutory Reserves
The Board of Managers is responsible for creating a reserve plan. These funds are designed to prevent the need for sudden, large special assessments. Review the budget to see if the association has met these funding goals or if they have consistently voted to waive them.
Evaluating Reserve Adequacy
Disclosures show the balance, but they do not guarantee adequacy. A healthy reserve fund depends on the age of the building and upcoming capital projects. If you are uncertain about the adequacy, ask the board for a multi-year capital expenditure schedule.
The Impact of Waiver Votes
If owners have voted to waive reserve requirements, the association is not maintaining a fund for future repairs. This increases the likelihood that you will face a special assessment when major components, such as roofs or elevators, eventually require replacement.
Worksheet for Reserve Review
Evaluate your association: 1) What is the total current reserve balance? 2) How many years has it been since the last capital reserve study? 3) Has the association voted to waive reserve funding in the last three years? 4) What are the top three projected capital costs over the next five years?
Checklist
- Obtain the association's most recent budget and financial statement.
- Check for a line item specifically labeled 'Reserves'.
- Review board meeting minutes for discussions about special assessments.
- Ask if a professional reserve study has been conducted recently.
- Inquire about past votes to waive reserve funding requirements.
Common questions
What happens if reserves are too low?
If reserves are insufficient, the association may issue a special assessment to pay for necessary repairs, requiring all owners to contribute a large lump sum based on their ownership percentage.
Can I trust the reserve balance reported in the budget?
The reported balance reflects the association's current savings, but it does not measure whether those savings are enough. It is purely an accounting figure, not a guarantee of financial readiness.
Sources
- CFPB — Closing Disclosure explainerChecked October 12, 2026
- Illinois Residential Real Property Disclosure ActChecked October 12, 2026
- Illinois Condominium Property Act — 2025 editionChecked October 12, 2026
- SQFT IO — Listing plans and termsChecked October 12, 2026
This guide is general educational content from SQFT IO, prepared with AI assistance. It is not legal, tax or loan advice. Talk with a licensed attorney, tax professional or lender about your situation. SQFT IO Illinois license 478.027617.